株探米国株
英語
エドガーで原本を確認する

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K

(Mark One)
 
☒       ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the fiscal year ended June 30, 2023
OR
☐      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to _________________.
 
Commission File Number 001-35019
 
HOME FEDERAL BANCORP, INC. OF LOUISIANA
(Exact name of registrant as specified in its charter)
 
Louisiana
 
02-0815311
(State or Other Jurisdiction of
 
(I.R.S. Employer
Incorporation or Organization)
 
Identification No.)
     
624 Market Street, Shreveport, Louisiana
 
71101
(Address of Principal Executive Offices)
 
(Zip Code)
 
(318) 222-1145
Registrant’s telephone number, including area code:
 
Securities registered pursuant to Section 12(b) of the Act:
       
   

   
Title of each Class
   Trading Symbol(s)
 
Name of each exchange on which registered
Common Stock (par value $.01 per share)
   HFBL
 
Nasdaq Stock Market, LLC
 
Securities registered pursuant to Section 12(g) of the Act:  None
         
           
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. 
Yes   No
 ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes   No
 ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 5(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  ☒  No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  ☒   No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer 
 ☐    
Accelerated filer          
 ☐
Non-accelerated filer

 
Smaller reporting company
 ☒
       
Emerging growth company
 ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.  ☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.        ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).    ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).                                              Yes ☐           No ☒
The aggregate value of the 2,104,486 shares of Common Stock of the Registrant issued and outstanding on December 31, 2022, which excludes an aggregate of 1,016,765 shares held by all directors and executive officers of the Registrant, the Registrant’s Employee Stock Ownership Plan (“ESOP”) and Employees’ Savings and Profit Sharing Plan (“401(k) Plan”) as a group was $36.0 million. This figure is based on the closing sales price of $17.11 per share of the Registrant’s Common Stock on December 31, 2022, the last business day of the Registrant’s second fiscal quarter. Although directors and executive officers, the ESOP and 401(k) Plan were assumed to be “affiliates” of the Registrant for purposes of this calculation, the classification is not to be interpreted as an admission of such status.
 
Number of shares of Common Stock outstanding as of September 18, 2023: 3,133,351
 
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Definitive Proxy Statement for the 2023 Annual Meeting of Shareholders are incorporated into Part III, Items 10 through 14.



Home Federal Bancorp Inc. of Louisiana
Form 10-K
For the Year Ended June 30, 2023

PART I.
Item 1.
1
Item 1A.
27
Item 1B.
27
Item 2.
27
Item 3.
27
Item 4.
27
PART II.
Item 5.
28
Item 6.
28
Item 7.
28
Item 7A.
40
Item 8.
41
Item 9.
94
Item 9A.
94
Item 9B.
94
Item 9C.
94
PART III.
Item 10.
95
Item 11.
95
Item 12.
95
Item 13.
95
Item 14.
96
PART IV.
 
Item 15.
96
Item 16.
97
98

PART I

Item 1. Business

Home Federal Bancorp, Inc. of Louisiana, a Louisiana chartered corporation (“Home Federal Bancorp” or the “Company”), is the holding company for Home Federal Bank (“Home Federal Bank” or the “Bank”). Home Federal Bank is a federally chartered stock savings bank originally organized in 1924 as Home Building and Loan Association. The Bank reorganized into the mutual holding company structure in January 2005 and changed its name to “Home Federal Bank” in 2009 as part of its business strategy to be recognized as a community bank. Home Federal Bank’s home office and ten full service branch offices are located in Caddo, Bossier and Webster Parishes, Louisiana and serve the Shreveport-Bossier City-Minden combined statistical area. In February 2023, the Bank acquired First National Bank of Benton and its full service branch office in Benton, Louisiana. Home Federal Bank’s business primarily consists of attracting deposits from the general public and using those funds to originate loans.

As of June 30, 2023, Home Federal Bancorp’s only business activities are to hold all of the outstanding common stock of Home Federal Bank. Home Federal Bancorp is authorized to pursue other business activities permitted by applicable laws and regulations for savings and loan holding companies, which may include the issuance of additional shares of common stock to raise capital or to support mergers or acquisitions and borrowing funds for reinvestment in Home Federal Bank.

Home Federal Bancorp does not own or lease any property but instead uses the premises, equipment, and furniture of Home Federal Bank. At the present time, Home Federal Bancorp employs only persons who are officers of Home Federal Bank to serve as officers of Home Federal Bancorp and may also use the support staff of Home Federal Bank from time to time. These other persons are not separately compensated by Home Federal Bancorp.

Pursuant to the regulations under Sections 23A and 23B of the Federal Reserve Act, Home Federal Bank and Home Federal Bancorp have entered into an expense sharing agreement. Under this agreement, Home Federal Bancorp will reimburse Home Federal Bank for the time that employees of Home Federal Bank devote to activities of Home Federal Bancorp, the portion of the expense of the annual independent audit attributable to Home Federal Bancorp, and all expenses attributable to Home Federal Bancorp’s public filing obligations under the Securities Exchange Act of 1934.

Market Area

Our primary market area for loans and deposits is in northwest Louisiana, particularly Caddo Parish and neighboring communities in Bossier and Webster Parishes, which are located in the Shreveport-Bossier City-Minden combined statistical area.

Our primary market area in northern Louisiana has a diversified economy with employment in services, government, and wholesale/retail trade constituting the basis of the local economy, with service jobs being the largest component. The majority of the services are health care related as Shreveport has become a regional hub for health care. The casino gaming industry also supports a significant number of the service jobs. The energy sector has a prominent role in the regional economy, resulting from oil and gas exploration and drilling.

Competition.  We face significant competition both in attracting deposits and in making loans. Our most direct competition for deposits has come historically from commercial banks, credit unions, and other savings institutions located in our primary market area, including many large financial institutions which have greater financial and marketing resources available to them. In addition, we face significant competition for investors’ funds from short-term money market securities, mutual funds, and other corporate and government securities. We do not rely upon any individual group or entity for a material portion of our deposits. Our ability to attract and retain deposits depends on our ability to generally provide a rate of return, liquidity, and risk comparable to that offered by competing investment opportunities.

Our competition for real estate loans comes principally from mortgage banking companies, commercial banks, other savings institutions, and credit unions. We compete for loan originations primarily through the interest rates and loan fees we charge and the efficiency and quality of services we provide borrowers. Factors which affect competition include general and local economic conditions, current interest rate levels, and volatility in the mortgage markets. Competition may increase as a result of the continuing reduction of restrictions on the interstate operations of financial institutions.

Lending Activities

General.  At June 30, 2023, our net loan portfolio amounted to $489.5 million, representing approximately 74.1% of total assets at that date. Historically, our principal lending activity was the origination of one-to-four family residential loans. At June 30, 2023, one-to-four family residential loans amounted to $179.6 million, or 36.7% of the total loan portfolio. In recent periods, we have sold a substantial amount of our fixed-rate conforming one-to-four family residential loans to correspondent banks. Commercial real estate loans amounted to $148.4 million, or 30.3% of the total loan portfolio, at June 30, 2023.

The types of loans that we may originate are subject to federal and state laws and regulations. Interest rates charged on loans are affected principally by the demand for such loans, the supply of money available for lending purposes, and the rates offered by our competitors. These factors are, in turn, affected by general and economic conditions, the monetary policy of the federal government, including the Federal Reserve Board, legislative and tax policies, and governmental budgetary matters.

A savings institution generally may not make loans to one borrower and related entities in an amount which exceeds 15% of its unimpaired capital and surplus, although loans in an amount equal to an additional 10% of unimpaired capital and surplus may be made to a borrower, if the loans are fully secured by readily marketable securities. In addition, upon application, the Office of the Comptroller of the Currency permits a savings institution to lend up to an additional 15% of unimpaired capital and surplus to one borrower to develop domestic residential housing units. At June 30, 2023, our regulatory limit on loans to one borrower was $7.6 million, and the five largest loans or groups of loans to one borrower, including related entities, aggregated $7.4 million, $5.8 million, $4.6 million, $4.4 million, and $4.4 million. Each of our five largest loans or groups of loans was originated with strong guarantor support to known borrowers in our market area and was performing in accordance with its terms at June 30, 2023.

Loans to or guaranteed by general obligations of a state or political subdivision are not subject to the foregoing lending limits.

Loan Portfolio Composition.  The following table shows the composition of our loan portfolio by type of loan at the dates indicated.

   
June 30,
 
   
2023
   
2022
 
         
Percent
         
Percent
 
         
of Total
         
of Total
 
   
Amount
   
Loans
   
Amount
   
Loans
 
Real estate loans:
  (Dollars in thousands)  
One-to-four family residential(1)
 
$
179,579
     
36.29
%
 
$
120,014
     
30.57
%
Commercial – real estate secured:
                               
Owner occupied
   
104,974
     
21.22
     
71,871
     
18.30
 
Non-owner occupied
   
43,467
     
8.78
     
55,718
     
14.19
 
Total commercial-real estate secured
   
148,441
     
30.00
     
127,589
     
32.49
 
Multi-family residential
   
28,849
     
5.83
     
30,411
     
7.75
 
Land
   
26,841
     
5.42
     
22,127
     
5.64
 
Construction
   
28,035
     
5.67
     
27,884
     
7.10
 
Home equity loans and second mortgage loans
   
2,450
     
0.50
     
1,587
     
0.40
 
Equity lines of credit
   
23,817
     
4.81
     
17,831
     
4.54
 
Total real estate loans
   
438,012
     
88.52
     
347,443
     
88.49
 
Commercial business
   
55,364
     
11.19
     
44,487
     
11.33
 
Consumer non-real estate loans:
                               
Savings accounts
   
372
     
0.07
     
266
     
0.07
 
Consumer loans
   
1,082
     
0.22
     
439
     
0.11
 
Total non-real estate loans
   
56,818
     
11.48
     
45,192
     
11.51
 
Total loans
   
494,830
     
100.00
%
   
392,635
     
100.00
%
Less:
                               
Allowance for loan losses
   
(5,173
)
           
(4,451
)
       
Deferred loan fees
   
(164
)
           
(311
)
       
Net loans receivable (1)
 
$
489,493
           
$
387,873
         


(1)
Does not include loans held-for-sale amounting to $4,000 and $4.0 million at June 30, 2023 and 2022, respectively.

Origination of Loans.  Our lending activities are subject to written underwriting standards and loan origination procedures established by the board of directors and management. When applicable, loans originated are also subject to the underwriting standards of Fannie Mae, Freddie Mac, HUD, VA, USDA, and correspondent banks that purchase loans we originate. Loan originations are obtained through a variety of sources, primarily from existing customers, local realtors, and builders. Written loan applications are taken by one of our loan officers. The loan officer also supervises the procurement of credit reports, income and asset documentation, and other documentation involved with a loan. All appraisals are ordered through an approved appraisal management company in compliance with the Dodd-Frank Consumer Protection Act. Under our lending policy, a title insurance policy is required on most mortgage loans, with the exception of certain smaller loan amounts where our policy requires a title opinion only. We also require fire and extended coverage casualty insurance in order to protect the properties securing the real estate loans. Borrowers must also obtain flood insurance policies when the property is in a flood hazard area.

Our loan approval process is intended to assess the borrower’s ability to repay the loan, the viability of the loan, and the value of the property that will secure the loan. All residential loans originated for sale to FNMA or other investor banks that receive an Approve-Eligible recommendation on the automated underwriting feedback certificate that is applicable for each loan type must be approved by a Bank mortgage underwriter. Loans that do not receive an Approve-Eligible recommendation must be approved by a Bank mortgage underwriter and the Senior Vice President of Mortgage. In addition, all loans originated to be held on the Bank’s portfolio must be approved by a Bank mortgage underwriter and the Senior Vice President of Mortgage for loans up to $500,000, and for loans up to $1.0 million by the Senior Credit Officer. Commercial real estate secured loans and lines of credit and commercial business loans up to $1.0 million must be approved by the Senior Credit Officer or the Chairman of the Board, President and Chief Executive Officer, up to $2.0 million by the Senior Credit Officer and the Chairman of the Board, President and Chief Executive Officer, and in excess of $2.0 million by the Executive Committee. In accordance with past practice, all loans are ratified by our board of directors.

In recent periods, we have originated and sold a substantial amount of our fixed-rate conforming mortgages to correspondent banks. For the year ended June 30, 2023, we originated $59.3 million of one-to-four family residential loans and sold $28.2 million of such loans. Our residential loan originations primarily consist of conventional, rural development, FHA, and VA loans.

The following table shows total loans originated, sold, and repaid during the periods indicated.

 
 
Year Ended June 30,
 
 
 
2023
   
2022
 
 
 
(In thousands)
 
Loan originations:
           
One-to-four family residential
 
$
59,319
   
$
148,081
 
Commercial — real estate secured:
               
Owner occupied
   
33,562
     
31,649
 
Non-owner occupied
   
19,289
     
33,216
 
Multi-family residential
   
21,233
     
4,951
 
Commercial business
   
51,314
     
48,253
 
Land
   
12,514
     
21,793
 
Construction
   
25,300
     
35,916
 
Home equity loans and lines of credit and other consumer
   
21,493
     
15,750
 
Total loan originations
   
244,024
     
339,609
 
Loans purchased
   
54,949
     
--
 
Total loan originations and loans purchased
   
298,973
     
339,609
 
Loans Sold
   
(24,865
)
   
( 87,238
)
Loan principal repayments
   
(171,869
)
   
(199,431
)
Total loans sold and principal repayments
   
102,239
     
52,940
 
Increase (decrease) due to other items, net(1)
 
$
103
     
(11,910
)
Net (decrease) increase in loan portfolio
 
$
102,342
   
$
(41,030
)


(1)
Other items consist of deferred loan fees, the allowance for loan losses, and loans held-for-sale at year end.

Although federal laws and regulations permit savings institutions to originate and purchase loans secured by real estate located throughout the United States, we concentrate our lending activity in our primary market area in Caddo, Bossier and Webster Parishes, Louisiana and the surrounding area. Subject to our loans-to-one borrower limitation, we are permitted to invest without limitation in residential mortgage loans and up to 400% of our capital in loans secured by non-residential or commercial real estate. We also may invest in secured and unsecured consumer loans in an amount not exceeding 35% of total assets. This 35% limitation may be exceeded for certain types of consumer loans, such as home equity and property improvement loans secured by residential real property. In addition, we may invest up to 10% of our total assets in secured and unsecured loans for commercial, corporate, business, or agricultural purposes. At June 30, 2023, we were within each of the above lending limits.

During fiscal 2023 and 2022, we sold $24.9 million and $87.2 million of loans, respectively. We recognized gain on sale of loans of $466,000 and $2.0 million during fiscal 2023 and 2022, respectively. Loans were sold during these periods primarily to other financial institutions. Such loans were sold against forward sales commitments with servicing released and without recourse after a certain period of time, typically 90 days. The loans sold primarily consisted of long-term, fixed rate residential real estate loans. These loans were originated during this period of historically low interest rates and were sold to reduce our interest rate risk. We will continue to sell loans in the future to the extent we believe the interest rate environment is unfavorable and interest rate risk is unacceptable.

Contractual Terms to Final Maturities.  The following table shows the scheduled contractual maturities of our loans as of June 30, 2023, before giving effect to net items. Demand loans, loans having no stated schedule of repayments and no stated maturity, and overdrafts are reported as due in one year or less. The amounts shown below do not take into account loan prepayments.

   
One-to-
Four
Family
Residential
   
Commercial
Real Estate
Secured
   
Multi
Family
Residential
   
Commercial
Business
   
Land
   
Construction
   
Home
Equity Loans
and Lines
of Credit
and Other
Consumer
   
Total
 
   
(In thousands)
 
Amounts due after June 30, 2023 in:
                                               
One year or less
 
$
15,344
   
$
19,461
   
$
1,223
   
$
14,437
   
$
9,993
   
$
21,248
   
$
9,542
   
$
91,248
 
After one year through two years
   
9,798
     
10,007
     
2,107
     
5,159
     
2,820
     
5,187
     
1,911
     
36,989
 
After two years through three years
   
14,495
     
9,259
     
4,526
     
5,640
     
4,050
     
--
     
834
     
38,804
 
After three years through five years
   
60,487
     
56,569
     
7,467
     
17,154
     
6,780
     
--
     
5,442
     
153,899
 
After five years through ten years
   
17,072
     
50,964
     
3,246
     
10,115
     
2,626
     
--
     
1.982
     
86,005
 
After ten years through fifteen years
   
9,525
     
1,701
     
9,288
     
2,859
     
183
     
1,316
     
7,455
     
32,327
 
After fifteen years
   
52,858
     
480
     
992
     
--
     
389
     
284
     
555
     
55,558
 
 
                                                               
Total
 
$
179,579
   
$
148,441
   
$
28,849
   
$
55,364
   
$
26,841
   
$
28,035
   
$
27,721
   
$
494,830
 

The following table sets forth the dollar amount of all loans at June 30, 2023, before net items, due after June 30, 2024, which have fixed interest rates or which have floating or adjustable interest rates.

         
Floating or
       
   
Fixed-Rate
   
Adjustable-Rate
   
Total
 
         
(In thousands)
       
One-to-four family residential
 
$
127,766
   
$
36,466
   
$
164,232
 
Commercial — real estate secured
   
126,267
     
2,713
     
128,980
 
Multi-family residential
   
27,626
     
--
     
27,626
 
Commercial business
   
36,567
     
4,360
     
40,927
 
Land
   
16,069
     
780
     
16,849
 
Construction
   
4,243
     
2,545
     
6,788
 
Home equity loans and lines of credit and other consumer
   
8,502
     
9,678
     
18,180
 
 
                       
Total
 
$
347,040
   
$
56,542
   
$
403,582
 

Scheduled contractual maturities of loans do not necessarily reflect the actual expected term of the loan portfolio. The average life of mortgage loans is substantially less than their average contractual terms because of prepayments. The average life of mortgage loans tends to increase when current mortgage loan rates are higher than rates on existing mortgage loans and, conversely, decrease when rates on current mortgage loans are lower than existing mortgage loan rates (due to refinancing of adjustable-rate and fixed-rate loans at lower rates). Under the latter circumstance, the weighted average yield on loans decreases as higher yielding loans are repaid or refinanced at lower rates.

One-to-Four Family Residential Real Estate Loans.  At June 30, 2023, $179.6 million, or 30.3%, of the total loan portfolio, before net items, consisted of one-to-four family residential loans.

The loan-to-value ratios, maturities, and other provisions of the loans made by us generally have reflected the policy of making less than the maximum loan permissible under applicable regulations, in accordance with sound lending practices, market conditions, and underwriting standards established by us. Our current lending policy on one-to-four family residential loans generally limits the maximum loan-to-value ratio to 90% or less of the appraised value of the property, although we will lend up to a 100% loan-to-value ratio with private mortgage insurance. These loans are amortized on a monthly basis with principal and interest due each month, terms not in excess of 30 years, and generally include “due-on-sale” clauses.

At June 30, 2023, $142.5 million, or 79.3%, of our one-to-four family residential mortgage loans were fixed-rate loans. Fixed-rate loans generally have maturities ranging from 15 to 30 years and are fully amortizing with monthly loan payments sufficient to repay the total amount of the loan with interest by the end of the loan term. Our fixed-rate loans generally are originated under terms, conditions, and documentation which permit them to be sold to U.S. Government-sponsored agencies, such as the Federal Home Loan Mortgage Corporation and other investors in the secondary mortgage market. Consistent with our asset/liability management, we have sold a significant portion of our long-term, fixed rate loans. Servicing is released on all loans sold except those loans sold to FNMA.

Although we offer adjustable rate loans, substantially all of the single-family loan originations over the last few years have consisted of fixed-rate loans due to the low interest rate environment. The adjustable-rate loans held in portfolio typically have interest rates which adjust on an annual basis. These loans generally have an annual cap of 1% on any increase or decrease and a cap of 6% above or below the initial rate over the life of the loan. Such loans are underwritten based on the initial rate plus 2%. At June 30, 2023, $37.1 million, or 20.7%, of our one-to-four family residential mortgage loans were adjustable rate loans.

Commercial Real Estate Secured Loans.  As of June 30, 2023, Home Federal Bank had outstanding $148.4 million of loans secured by commercial real estate, $105.0 million, or 70.7%, of which were owner occupied. It is the current policy of Home Federal Bank to lend in a first lien position on real property occupied as a commercial business property. Home Federal Bank offers fixed and variable rate commercial real estate loans. Home Federal Bank’s commercial real estate loans are limited to a maximum of 85% of the appraised value and have terms up to 15 years, however, the terms are generally no more than five years with amortization periods of 20 years or less. It is our policy that commercial real estate secured lines of credit are limited to a maximum of 85% of the appraised value of the property and shall not exceed three to five year amortizations.

Multi-Family Residential Loans.  At June 30, 2023, we had outstanding approximately $28.8 million of multi-family residential loans. Our multi-family residential loan portfolio includes income producing properties of five or more units and low income housing developments. We obtain personal guarantees on all properties other than those of the public housing authority for which they are not permitted.

Commercial Business Loans.  At June 30, 2023, we had outstanding approximately $55.4 million of non-real estate secured commercial loans. The business lending products we offer include lines of credit, inventory financing, and equipment loans. Commercial business loans and lines of credit carry more credit risk than other types of commercial loans. We attempt to limit such risk by making loans predominantly to small- and mid-sized businesses located within our market area and having the loans personally guaranteed by the principals involved. We have established underwriting standards in regard to business loans which set forth the criteria for sources of repayment, borrower’s capacity to repay, specific financial and collateral margins, and financial enhancements such as guarantees. The primary source of repayment is cash flow from the business and the general financial strength of the borrower.

Land Loans.  As of June 30, 2023, land loans were $26.8 million, or 5.4%, of the total loan portfolio, before net items. Land loans include land which has been acquired for the purpose of development and unimproved land. Our loan policy provides for loan-to-value ratios of 50% for unimproved land loans. Land loans are originated with fixed rates and terms up to five years with longer amortizations. Although land loans generally are considered to have greater credit risk than certain other types of loans, we expect to mitigate such risk by requiring personal guarantees and identifying other secondary sources of repayment for the land loan other than the sale of the collateral. It is our practice to only originate a limited amount of loans for speculative development to borrowers with whom our lenders have a prior relationship.

Construction Loans.  At June 30, 2023, we had outstanding approximately $28.0 million, or 5.7%, of construction loans which included loans for the construction of residential and commercial property. Our residential construction loans typically have terms of six to twelve months with a takeout letter from Home Federal for the permanent mortgage. Our commercial construction loans include owner occupied commercial properties, pre-sold property, and speculative office property. As of June 30, 2023, we held $315,000 of speculative construction loans.

Home Equity and Second Mortgage Loans.  At June 30, 2023, we held $2.5 million of home equity and second mortgage loans. These loans are secured by the underlying equity in the borrower’s residence. We do not require that we hold the first mortgage on the properties that secure the second mortgage loans. The amount of our second mortgage loans generally cannot exceed a loan-to-value ratio of 90% after taking into consideration the first mortgage loan. These loans are typically three-to-five year balloon loans with fixed rates and terms that will not exceed 10 years and contain an on-demand clause that allows us to call the loan in at any time.

Equity Lines of Credit.  We offer lines of credit secured by a borrower’s equity in real estate. These loans amounted to $23.8 million, or 4.8% of the total loan portfolio, before net items, at June 30, 2023. The unused portion of equity lines was $13.2 million at June 30, 2023. The rates and terms of such lines of credit depend on the history and income of the borrower, purpose of the loan, and collateral. Lines of credit will not exceed 90% of the value of the equity in the collateral.

Consumer Non-Real Estate Loans.  We are authorized to make loans for a wide variety of personal or consumer purposes. We originate consumer loans primarily in order to accommodate our customers. The consumer loans at June 30, 2023 consist of loans secured by deposit accounts with us, automobile loans, overdraft, and other unsecured loans.

Consumer non-real estate loans generally have shorter terms and higher interest rates than residential mortgage loans and generally entail greater credit risk than residential mortgage loans, particularly those loans secured by assets that depreciate rapidly, such as automobiles, boats, and recreational vehicles. In such cases, repossessed collateral for a defaulted consumer loan may not provide an adequate source of repayment for the outstanding loan, and the remaining deficiency often does not warrant further substantial collection efforts against the borrower. In particular, amounts realizable on the sale of repossessed automobiles may be significantly reduced based upon the condition of the automobiles and the fluctuating demand for used automobiles.

We offer loans secured by deposit accounts held with us. These loans amounted to $372,000, or 0.07% of the total loan portfolio, before net items, at June 30, 2023. Such loans are originated for up to 100% of the account balance, with a hold placed on the account restricting the withdrawal of the account balance. The interest rate on the loan is equal to the interest rate paid on the account plus 2%. These loans typically are payable on demand with a maturity date of one year.

Loan Origination and Other Fees.  In addition to interest earned on loans, we generally receive loan origination fees or “points” for originating loans. Loan points are a percentage of the principal amount of the mortgage loan and are charged to the borrower in connection with the origination of the loan. In accordance with accounting guidance, loan origination fees and points are deferred and amortized into income as an adjustment of yield over the life of the loan.

Asset Quality

General.  During fiscal 2023 our annual review commenced in August 2023 and is expected to be completed in October 2023. The scope of the services provided included testing of credit underwriting, adherence to our loan policies, as well as regulatory policies, and recommendations regarding reserve allocations. We expect these reviews will be done roughly every twelve to eighteen months.

Our collection procedures provide that when a loan is 10 days past due personal contact efforts are attempted, either in person or by telephone. At 15 days past due, a late charge notice is sent to the borrower requesting payment. If the loan is still past due at 30 days, a formal letter is sent to the borrower stating that the loan is past due and that legal action, including foreclosure proceedings, may be necessary. If a loan becomes 60 days past due and no progress has been made in resolving the delinquency, a collection letter from legal counsel is sent and personal contact is attempted. When a loan continues in a delinquent status for 90 days or more, and a repayment schedule has not been made or kept by the borrower, generally a notice of intent to foreclose is sent to the borrower. If the delinquency is not cured, foreclosure proceedings are initiated. In most cases, deficiencies are cured promptly. While we generally prefer to work with borrowers to resolve such problems, we will institute foreclosure or other collection proceedings, when necessary, to minimize any potential loss.

Loans are placed on non-accrual status when management believes the probability of collection of interest is doubtful. When a loan is placed on non-accrual status, previously accrued but unpaid interest is deducted from interest income. We generally discontinue the accrual of interest income when the loan becomes 90 days past due, as to principal or interest, unless the credit is well secured and we believe we will fully collect.

Real estate and other assets we acquire as a result of foreclosure or by deed-in-lieu of foreclosure are classified as real estate owned until sold. At June 30, 2023, we had $368,000 in other real estate owned consisting of two single family residences compared to none at June 30, 2022.

Delinquent Loans.  The following table shows the delinquencies in our loan portfolio as of the dates indicated.

   
June 30,
 
   
2023
   
2022
 
   
30 – 89 Days Overdue
   
90 or More Days
Overdue
   
30 – 89 Days Overdue
   
90 or More Days
Overdue
 
   
Number
   
Principal
   
Number
   
Principal
   
Number
   
Principal
   
Number
   
Principal
 
   
of Loans
   
Balance
   
of Loans
   
Balance
   
of Loans
   
Balance
   
of Loans
   
Balance
 
   
(Dollars in thousands)
 
One-to-four family residential
    3
   
$
927
     
1
   
$
$1,17​5
     
4
   
$
1,923
     
5
   
$
387
 
Commercial – real estate secured
   
--
     
--
     
--
     
--
     
--
     
--
     
--
     
--
 
Multi-family residential
   
--
     
--
     
--
     
--
     
--
     
--
     
--
     
--
 
Commercial business
    3
      63
     
--
     
--
     
--
     
--
     
--
     
--
 
Land
    1
      36
     
--
     
--
     
--
     
--
     
--
     
--
 
Construction
   
--
     
--
     
--
     
--
     
--
     
--
     
--
     
--
 
Home equity loans and lines of credit and other consumer
    3
      54
     
--
     
--
     
1
     
24
     
--
     
--
 
                                                                 
Total delinquent loans
    10
      1,080
    $ 4       1,175
   
$
5
   
$
1,947
     
5
   
$
387
 
 
                                                               
Delinquent loans to total net loans
           
0.22
%
           
0.24
%
           
0.50
%
           
0.30
%
Delinquent loans to total loans
           
0.22
%
           
0.24
%
           
0.50
%
           
0.30
%

Non-Performing Assets.  The following table shows the amounts of our non-performing assets (defined as non-accruing loans, accruing loans 90 days or more past due, and real estate owned) at the dates indicated.

   
June 30,
 
   
2023
   
2022
 
   
(Dollars in thousands)
 
Non-accruing loans:
           
One-to-four family residential
 
$
1,164
   
$
2,157
 
Commercial — real estate secured
   
--
     
--
 
Multi-family residential
   
--
     
--
 
Commercial business
    64
     
--
 
Land
   
--
     
--
 
Construction
   
--
     
--
 
Home equity loans and lines of credit and other consumer
   
--
     
--
 
Total non-accruing loans
    1,228
     
2,157
 
Accruing loans 90 days or more past due:
               
One-to-four family residential
   
--
     
26
 
Commercial — real estate secured
   
--
     
--
 
Multi-family residential
   
--
     
--
 
Commercial business
   
--
     
--
 
Land
   
--
     
--
 
Construction
   
--
     
--
 
Home equity loans and lines of credit and other consumer
   
--
     
--
 
Total non-performing loans(1)
    1,228      
2,183
 
Real estate owned, net
           
--
 
Total non-performing assets
  $ 368    
$
2,183
 
                 
Troubled debt restructurings (2)
    10
     
212
 
Total non-performing assets and troubled debt restructurings
  $ 1,606    
$
2,395
 
                 
Total non-performing loans as a percent of loans, net
    0.25
%
   
0.56
%
Total non-performing assets as a percent of total assets
    0.06
%
   
0.37
%
Total non-performing assets and troubled debt restructurings as a percentage of total assets
    0.24
%
   
0.41
%


(1)
Non-performing loans consist of non-accruing loans plus accruing loans 90 days or more past due.
(2)
Troubled debt restructurings not included in non-accruing loans and accruing loans 90 days or more past due.

At June 30, 2023, the Company had $1.6 million of non-performing assets (defined as non-accruing loans, accruing loans 90 days or more past due, and other real estate owned) compared to $2.2 million of non-performing assets at June 30, 2022, consisting of seven single family residential loans, two commercial non-real estate loans, one consumer loan, and two single family residences in other real estate owned at June 30, 2023, compared to nine single family residential loans and one line of credit loan at June 30, 2022.  The decrease in non-performing assets from $2.5 million at June 30, 2022 to $1.6 million at June 30, 2023 was primarily due to an improvement in loan credit quality at June 30, 2023. At June 30, 2023, the Company had ten single family residential loans, three commercial non-real estate loans, two commercial real estate loans, and three home equity line-of credit loans classified as substandard compared to five single family residential loans and two commercial real estate loans classified as substandard at June 30, 2022. There were no loans classified as doubtful at June 30, 2023 or 2022.

Classified Assets.  Federal regulations require that each insured savings institution classify its assets on a regular basis and the amount of its valuation allowance is subject to review by Federal bank regulators. There are three classifications for problem assets: “substandard”, “doubtful”, and “loss”. Substandard assets have one or more defined weaknesses and are characterized by the distinct possibility that the insured institution will sustain some loss, if the deficiencies are not corrected. Doubtful assets have the weaknesses of substandard assets with the additional characteristic that the weaknesses make collection or liquidation in full on the basis of currently existing facts, conditions, and values questionable, and there is a higher possibility of loss. An asset classified as loss is considered uncollectible and of such little value that continuance as an asset of the institution is not warranted. Another category designated “special mention” also must be established and maintained for assets which do not currently expose an insured institution to a sufficient degree of risk to warrant classification as substandard, doubtful, or loss. Assets classified as substandard or doubtful require the institution to establish general allowances for loan losses. If an asset, or portion thereof, is classified as loss, the insured institution must either establish specific allowances for loan losses in the amount of 100% of the portion of the asset classified loss, or charge-off such amount. General loss allowances established to cover possible losses related to assets classified substandard or doubtful may be included in determining an institution’s regulatory capital, while specific valuation allowances for loan losses do not qualify as regulatory capital. Federal examiners may disagree with an insured institution’s classifications and amounts reserved. At June 30, 2023, we had $7.1 million in classified assets.  There were six residential mortgage loans designated as special mention for $810,000, six commercial non-real estate loans for $2.3 million and one auto loan for $1,000. There were seven residential mortgage loans totaling $2.2 million, five commercial real estate loans for $1.7 million, three home equity line-of-credit loans for $69,000, and one auto loan for $21,000 classified as substandard.  There were no loans classified as doubtful or loss at June 30, 2023.

Allowance for Loan Losses.  At June 30, 2023, our allowance for loan losses amounted to $5.2 million. The allowance for loan losses is maintained at a level believed, to the best of our knowledge, to cover all known and inherent losses in the portfolio, both probable and reasonable, to be estimated at each reporting date. The level of allowance for loan losses is based on our periodic review of the collectability of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, and prevailing conditions. Historically, we have primarily engaged in originating single-family residential loans. Our management considers the deficiencies of all classified loans in determining the amount of allowance for loan losses required at each reporting date. Our management analyzes the probability of the correction of the substandard loans’ weaknesses and the extent of any known or inherent losses that we might sustain on them. During the fiscal year 2023, we recorded a provision for loan losses of $868,000, as compared to $336,000 recorded for fiscal year 2022.

The increase in the provision for fiscal year 2023 primarily reflects an overall growth in our loan portfolio. Total non-performing loans decreased by approximately $0.8 million as of June 30, 2023 compared to June 30, 2022.

While management believes that it determines the size of the allowance based on the best information available at the time, the allowance will need to be adjusted as circumstances change and assumptions are updated. Future adjustments to the allowance could significantly affect net income.

The following table shows changes in our allowance for loan losses during the periods presented. We had $237,000 and $31,000 of loan charge-offs during fiscal 2023 and 2022, respectively. Bad debt recoveries amounted to $91,000 and $24,000 during fiscal 2023 and 2022, respectively.

   
June 30,
 
   
2023
   
2022
 
   
(Dollars in thousands)
 
Total loans outstanding at end of period
 
$
494,830
   
$
392,635
 
Average loans outstanding
   
442,469
     
360,774
 
Allowance for loan losses, beginning of period
   
4,451
     
4,122
 
Provision for loan losses
   
868
     
336
 
Recoveries
   
91
     
24
 
Charge-offs
   
(237
)
   
(31
)
Allowance for loan losses, end of period
 
$
5,173
   
$
4,451
 
                 
Allowance for loan losses as a percent of non-performing loans
    417.85
%
   
202.91
%
Allowance for loan losses as a percent of loans outstanding
   
1.05
%
   
1.13
%

The following table shows how our allowance for loan losses is allocated by type of loan at each of the dates indicated.

   
2023
   
2022
 
   
Amount of
Allowance
   
Loan
Category
as a %
of Total
Loans
   
Amount of
Allowance
   
Loan
Category
as a %
of Total
Loans
 
   
(Dollars in thousands)
 
One-to-four family residential
 
$
1,900
     
36.72
%
 
$
1,367
     
30.71
%
Commercial – real estate secured
    1,673
      32.34
     
1,295
     
29.10
 
Multi-family residential
    228
      4.41
     
357
     
8.02
 
Commercial business
    588
      11.37
     
646
     
14.51
 
Land
    274
      5.30
     
305
     
6.85
 
Construction
    254
      4.91
     
282
     
6.34
 
Home equity loans and lines of credit and other consumer
    256
      4.95
     
199
     
4.47
 
Total
  $ 5,173      
100.00
%
 
$
4,451
     
100.00
%

Investment Securities

We have authority to invest in various types of securities, including mortgage-backed securities, U.S. Treasury obligations, securities of various federal agencies and of state and municipal governments, certificates of deposit at federally insured banks and savings institutions, certain bankers’ acceptances, and federal funds. Our investment strategy is established by the board of directors.

The following table sets forth certain information relating to our investment securities portfolio at the dates indicated.

   
June 30,
 
   
2023
   
2022
 
   
Amortized
Cost
   
Fair
Value
   
Amortized
Cost
   
Fair
Value
 
   
(In thousands)
 
Securities Held-to-Maturity:
                       
Mortgage-backed securities
 
$
71,568
   
$
58,447
   
$
78,072
   
$
67,737
 
Municipals
   
1,311
     
1,231
     
1,336
     
1,234
 
FNBB stock
   
250
     
250
     
250
     
250
 
FHLB stock
   
1,294
     
1,294
     
292
     
292
 
Total Securities Held-to-Maturity
   
74,423
     
61,222
     
79,950
     
69,513
 
                                 
Securities Available-for-Sale:
                               
Mortgage-backed securities
   
32,063
     
28,634
     
30,250
     
28,099
 
Municipals
   
1,068
     
1,076
     
--
     
--
 
US Treasury Securities
   
9,779
     
9,841
     
--
     
--
 
Total Securities Available for sale
   
42,910
     
39,551
     
30,250
     
28,099
 
                                 
Total Investment Securities
 
$
117,333
   
$
100,773
   
$
110,200
   
$
97,612
 

The following table sets forth the amount of investment securities which contractually mature during each of the periods indicated and the weighted average yields for each range of maturities at June 30, 2023. The amounts reflect the fair value of our securities at June 30, 2023.

   
Amounts at June 30, 2023 which Mature in
 
   
One Year
or Less
   
Weighted
Average Yield
   
Over One
Year
Through
Five
Years
   
Weighted
Average
Yield
   
Over
Five
Through
Ten
Years
   
Weighted
Average
Yield
   
Over
Ten
Years
   
Weighted
Average
Yield
 
   
(Dollars in thousands)
 
Bonds and other debt securities:
                                               
Mortgage-backed securities
 
$
--
     
--
%
 
$
1
     
3.14
%
 
$
​1,771
     
2.85
%
 
$
8​5,​309
     
1.88
%
Municipals
   
--
     
--
     
210
     
1.05
     
--
     
--
     
2,097
     
3.19
 
US Treasury securities
   
7,847
     
2.15
     
1,994
     
2.01
     
--
     
--
     
--
     
--
 
Equity securities(1):
                                                               
FNBB stock
   
--
     
--
     
--
     
--
     
--
     
--
     
250
     
1.25
%
FHLB stock
   
--
     
--
     
--
     
--
     
--
     
--
     
1,294
     
4.60
%
                                                                 
Total investment securities and bank stock
 
$
7,847
     
2.15
%
 
$
2,205
     
1.92
%
 
$
1,​771
     
2.85
%
 
$
88,​950
     
1.95
%


(1)
None of the listed equity securities has a stated maturity.

Our investment in equity securities consists primarily of FHLB stock and shares of First National Bankers Bankshares, Inc. (“FNBB”). Management monitors its investment portfolio to determine whether any investment securities which have unrealized losses should be considered other than temporarily impaired.

Mortgage-backed securities represent a participation interest in a pool of one-to-four family or multi-family mortgages. The mortgage originators use intermediaries (generally U.S. Government agencies and government-sponsored enterprises) to pool and repackage the participation interests in the form of securities, with investors receiving the principal and interest payments on the mortgages. Such U.S. Government agencies and government-sponsored enterprises guarantee the payment of principal and interest to investors.

Mortgage-backed securities are typically issued with stated principal amounts, and the securities are backed by pools of mortgages that have loans with interest rates that are within a range and have varying maturities. The underlying pool of mortgages, i.e., fixed-rate or adjustable-rate, as well as prepayment risk, are passed on to the certificate holder. The life of a mortgage-backed pass-through security approximates the life of the underlying mortgages.

Our mortgage-backed securities consist of Ginnie Mae securities (“GNMA”), Freddie Mac securities (“FHLMC”), and Fannie Mae securities (“FNMA”). Ginnie Mae is a government agency within the Department of Housing and Urban Development, which is intended to help finance government-assisted housing programs. Ginnie Mae securities are backed by loans insured by the Federal Housing Administration or guaranteed by the Veterans Administration. The timely payment of principal and interest on Ginnie Mae securities is guaranteed by Ginnie Mae and backed by the full faith and credit of the U.S. Government. Freddie Mac is a private corporation chartered by the U.S. Government. Freddie Mac issues participation certificates backed principally by conventional mortgage loans. Freddie Mac guarantees the timely payment of interest and the ultimate return of principal on participation certificates. Fannie Mae is a private corporation chartered by the U.S. Congress with a mandate to establish a secondary market for mortgage loans. Fannie Mae guarantees the timely payment of principal and interest on Fannie Mae securities. Freddie Mac and Fannie Mae securities are not backed by the full faith and credit of the U.S. Government. In September 2008, the Federal Housing Finance Agency was appointed as conservator of Fannie Mae and Freddie Mac. The U.S. Department of the Treasury agreed to provide capital, as needed, to ensure that Fannie Mae and Freddie Mac continue to provide liquidity to the housing and mortgage markets.

Mortgage-backed securities generally yield less than the loans which underlie such securities because of their payment guarantees or credit enhancements, which offer nominal credit risk. In addition, mortgage-backed securities are more liquid than individual mortgage loans and may be used to collateralize our borrowings or other obligations.

The following table sets forth the composition of our mortgage-backed securities portfolio at fair value at each of the dates indicated. The amounts reflect the fair value of our mortgage-backed securities at June 30, 2023 and 2022.

   
June 30,
 
   
2023
   
2022
 
   
(In thousands)
 
Fixed rate:
           
GNMA
 
$
4,114
   
$
3,831
 
FHLMC
   
35,291
     
34,906
 
FNMA
   
47,461
     
55,940
 
Total fixed rate
   
86,866
     
94,677
 
Adjustable rate:
               
GNMA
   
210
     
1,150
 
FHLMC
   
5
     
9
 
FNMA
   
--
     
--
 
Total adjustable-rate
   
215
     
1,159
 
Total mortgage-backed securities
 
$
87,081
   
$
95,836
 

Information regarding the contractual maturities and weighted average yield of our mortgage-backed securities portfolio at June 30, 2023 is presented below. Due to repayments of the underlying loans, the actual maturities of mortgage-backed securities generally are substantially less than the scheduled maturities. The amounts reflect the fair value of our mortgage-backed securities at June 30, 2023.

   
Amounts at June 30, 2023 Which Mature in
 
   
One Year
or Less
   
Weighted
Average
Yield
   
Over One
through
Five Years
   
Weighted
Average
Yield
   
Over
Five Years
   
Weighted
Average
Yield
 
   
(In thousands)
 
Fixed rate:
                                   
GNMA
 
$
--
     
--
%
 
$
--
     
--
%
 
$
4,114
     
1.53
%
FHLMC
   
--
     
--
     
--
     
--
     
35,291
     
1.90
 
FNMA
   
--
     
--
     
--
     
--
     
47,460
     
1.88
 
Total fixed-rate
   
--
     
--
%
   
--
     
--
%
 
$
86,865
     
1.87
%
                                                 
Adjustable rate:
                                               
GNMA
 
$
--
     
--
%
 
$
1
     
3.15
%
 
$
210
     
2.71
%
FHLMC
   
--
     
--
     
--
     
--
     
5
     
4.00
 
FNMA
   
--
     
--
     
--
     
--
     
--
     
--
 
Total adjustable rate
   
--
     
--
%
 
$
1
     
3.15
%
 
$
215
     
2.74
%
                                                 
Total
 
$
--
     
--
%
 
$
1
     
3.15
%
 
$
87,080
     
1.87
%

The following table sets forth the purchases, sales, and principal repayments of our mortgage-backed securities during the periods indicated.

   
At or For the
Year Ended June 30,
 
   
2023
   
2022
 
   
(Dollars in thousands)
 
Mortgage-backed securities at beginning of period
 
$
108,322
   
$
82,019
 
Purchases
   
6,278
     
44,103
 
Repayments
   
(11,029
)
   
(17,716
)
Sales
   
--
     
--
 
Amortizations of premiums and discounts, net
   
60
     
(84
)
                 
Mortgage-backed securities at end of period
 
$
103,631
   
$
108,322
 
                 
Weighted average yield at end of period
   
1.84
%
   
1.68
%

Sources of Funds

General.  Deposits are our primary source of funds for lending and other investment purposes. In addition to deposits, principal and interest payments on loans and investment securities are a source of funds. Loan repayments are a relatively stable source of funds, while deposit inflows and outflows are significantly influenced by general interest rates and money market conditions. Borrowings may also be used on a short-term basis to compensate for reductions in the availability of funds from other sources and on a longer-term basis for general business purposes.

Deposits.  We attract deposits principally from residents of Louisiana and particularly from Caddo, Webster, and Bossier Parishes. Deposit account terms vary, with the principal differences being the minimum balance required, the time periods the funds must remain on deposit, and the interest rate. We utilize brokered certificates of deposit as a component of our strategy for lowering the overall cost of funds. The brokered certificates of deposit are callable by Home Federal Bank after twelve months. At June 30, 2023 and 2022, we had $3.0 million and $6.0 million, respectively, in brokered certificates of deposit.

We establish interest rates paid, maturity terms, service fees, and withdrawal penalties on a periodic basis. Management determines the rates and terms based on rates paid by competitors, the need for funds or liquidity, growth goals, and federal regulations. We attempt to control the flow of deposits by pricing our accounts to remain generally competitive with other financial institutions in the market area.

The following table shows the distribution of, and certain other information relating to, our deposits by type of deposit, as of the dates indicated.

     
June 30,
 
     
2023
   
2022
 
     
Amount
   
Percent of
Total
Deposits
   
Amount
   
Percent of
Total
Deposits
 
     
(Dollars in thousands)
 
Certificate accounts:
                         
0.00%- 0.99%

 
$
19,248
     
3.22
%
 
$
36,150
   
$
6.80
%
1.00%- 1.99%

   
11,630
     
1.95
     
28,559
     
5.37
 
2.00%- 2.99%

   
14,647
     
2.45
     
14,323
     
2.69
 
3.00%- 3.99%

   
50,365
     
8.43
     
1,252
     
0.23
 
4.00%- 4.99%

   
93,037
     
15.57
     
--
     
--
 
5.00%- 5.99%

   
1,456
     
0.24
     
--
     
--